Editor,
The Bay department store chain, also known as HBC (Hudson’s Bay Company), is nearly $1 billion in debt and those debts are getting called in by the creditors. As a result, Canada’s oldest department store began liquidating 90 of its 96 stores last month, triggering widespread distress among its workforce and affiliated small businesses. As well, HBC will pay up to $3 million total in retention bonuses to 121 managers and executives — but will not pay severance to its more than 9,300 workers, most of whom will soon lose their jobs. Also at stake are pensions, health benefits and long-term disability supports, according to Andrew Hatnay, a lawyer representing employees. This affects a group of people that are “extremely vulnerable as they cannot work and are highly dependent on their long-term disability benefits for their livelihoods.”
Hudson’s Bay filed for court protection on March 7 to shield itself from creditors while seeking financing. Unfortunately, the workers of HBC are only entitled to a maximum of $8,800 severance under the federal Wage Earner Protection Program Act, no matter if they worked there for 50 years of their life. That’s a pittance. Furthermore, disabled employees that HBC had been supporting may also be cut off. In addition to employees, small businesses that operated inside Bay stores also face losses. As well, local businesses that supplied The Bay are also affected.
HBC has all but given up on saving the 90 stores that are closing, and is barely clinging on to hope that it can save the remaining 6 stores. As it stands, the courts will close the remaining stores by April 8th if nothing changes. Several of Hudson’s Bay’s senior secured lenders – Bank of America, Pathlight Capital and Restore Capital – are eager to take first dibs of their debt back.
Why do patriotic Canadians allow the Bank of America to shut down North America’s oldest company? Why exactly is the Bank of America one of the lending partners leading the charge to bring down HBC? Are they being manipulated by The White House to destabilize our economy? Is the timing of the HBC shut down coincidental?
The government should step in like they did during the 2008 economic crises that then Governor of the Bank of Canada (and now Prime Minister) Mark Carney presided over, when the government bailed out the banking industry to the tune of billions of dollars (with grants and loans). According to the The Big Banks’ Big Secret, a book by the chief economist at the CCPA David Macdonald, between 2008 and 2010 the government bolstered our banks to the tune of $114 billion, an amount that equals $3,400 for every Canadian.
On December 20, 2008 the government of Canada and the province of Ontario offered $3.3 billion in loans to the auto industry. Under the plan GM would receive $3 billion and Chrysler will receive the rest. Ford only asked for a line of credit but said it will not be participating in the bailout. Eventually, the federal and Ontario governments lent automakers $13.7 billion and recouped $10 billion in repayments, interest, share sales and dividend payments, for a CAN$3.7-billion loss.
According to David MacDonald, at one point three of the country’s biggest banks — CIBC, Bank of Montreal and Scotiabank — were receiving government support that was equal to or more than the value of the company’s shares. “Government programs could have just purchased every single share in those banks instead of providing support,” he said. “That’s not the story Canadians were told. There was a massive failure in the private-sector market.”
If the government bails out The Bay, it should look for an ownership stake of The Bay, in order to encourage a broader “Buy Canada” policy, and support a greater Canadian textiles industry and other homegrown industries, including ones that produce housewares. Fifty years ago, it was common for local business and factories to supply The Bay with items, employing local people in the process. Yet with globalization came an almost total reliance on China and other Pacific Rim nations for manufactured goods at the expense of local production. But a mere billion dollar investment from the government can help spur local economies across Canada.
Robert Nelly, North Bay
